Is Outsourcing good for the US and us?

Is Outsourcing good for the US and us?

written by Sota Mizuno 04.8.16

Many jobs is outsourced from US to Asia. Recent reports said that offshoring of white-collar jobs have attracted the attention of politicians, journalists and workers.
Why are US people worried about white-collar jobs outsourcing? They saw that programmer losing jobs didn’t get any jobs after 2001. “The U.S. economy experienced an acute job creation crisis: between March 2001 and March 2004 private-sector jobs were down by 2.6 million, including 560,000 jobs lost even after the official recession ended in November 2001. ” “Unemployment among programmers has soared much higher than the national average (see Figure 1).” ( Economic Policy Institute, Frequently asked questions (FAQ) about offshoring, EPI ISSUE GUIDE “offshoring”, para. 1, 2004 )

We have 3 reason of offshoring. 1:cheap industrial labor, 2:big market of Asia especially China and India, 3:falling communication costs by the Internet. And, our jobs is outsourced to Asia by economical incentive. (Eimei Onaga. Interview to CEO of Innovation Matrix,a startup about outsourcing and technology transfer of Robotics. 5 August 2004.)
We know “comparative advantage theory” now. and it is powerful and basic of International economy. Comparative advantage theory teach us that all country have comparative advantage. Any country had better to play its own game. If your country focused on comparative advantage industry, whole world people get more rich life. (Mankiw, 2000)

We disagree with offshoring. Because, it is harmful to our economy and life.
Economical reason is “Strategic trade policy”, “Factor-price equalization theorem”. “Strategic trade policy” means that historical factor decide advantage of industry and we protect growing industry like EU protect AirBus by bounty. (Krugman, 2002) “Factor-price equalization theorem” means that “States that when two countries start out with similar technology and skills but different wage rates, trade between them will reduce wages in the high-paying country and increase wages in the low-paying country until, eventually, workers in both places end up earning the same amount.” (Cassidy, 2004, p30)
We disagree with losing competition and falling salary. It threaten our life.
Political reason is worker’s life. We are facing with people losing jobs now. Neighbor is suffering. We should give them jobs and save them.
Philosophical reason is patriotism and nationalism. We think about my country naturally. If US maintain dominant economy in the truly global economy, we will grow our industry and jobs by strategic policy.

We agree with offshoring. Because, it is good for our economy and life. Economical reason is “Free trade policy”, “Comparative advantage theory”.
“Free trade policy” means that free trade increase social welfare of whole world people. (Krugman, 2002) “Comparative advantage theory” tells us that trade embargo and bounty is harmful. These spoil the industry. We disagree with arbitrary preferential treatment like trade embargo and bounty. It is harmful and non-fair.
Political reason is social welfare of world people. We are facing with poor people in 3rd world now. And, any jobs make poor people happy. (Krugman, 1997) John Kerry, Democratic Party nominee changed his mind for union’s power in election. But, he was promote to NAFTA. He knows merit of free trade.
Philosophical reason is liberalism and libertarianism. Liberals should be cosmopolitan. John Rowls (1971) wrote that We had better improve the poorest people for justice. “A theory of justice” a classic of modern liberalism remember us what is fairness and justice. Equality of opportunity should be guaranteed any people. Libertarian should be individual cosmopolitan. Robert Nozick (1977) wrote that Only minimum nation is reasonable. “Anarchy, State, and Utopia” a classic of modern libertarianism remember us what is freedom. Individual freedom is supremacy. Any individual have same rights.

Who are we? Some of US lost jobs, some of Indian got jobs. US is us?
World people is us?
Offshoring is not avoidable. All people in the world are going to the same quality of life.
Free trade policy is more powerful to improve life in US than Strategic trade theory, Krugman (2002) said. He is author of a basic text of international economy and one of inventor of theory about strategic trade theory.
What can we do for rest of us, low-skill people? We can make new social welfare based on rights equality. We decrease arbitrary preferential treatment like deduction from income, and we can make “basic income”. It includes jobless insurance, pension by nation. Basic income is like welfare payment, but it is paid to everyone. (Philippe. 2000).
We are plenty. Human being don’t have to work in future by mechanization and computerization. Current social welfare is big and arbitrary. We can make basic income to survive, now.
Work to fan, don’t work to live.

Cassidy, John. (2004, August 2). Winners and Losers. The New Yorker, August 2, 2004, 26-30
Economic Policy Institute. (2004, June). Frequently asked questions (FAQ) about offshoring. EPI ISSUE GUIDE “offshoring”. Retrieved August 16, 2004 from the World Wide Web: www.epinet.org/content.cfm/issueguide_offshoring
Krugman, Paul (1997, March 20). In Praise of Cheap Labor. Dismal science. Retrieved August 16, 2004 from the World Wide Web: web.mit.edu/krugman/www/smokey.html
Krugman,Paul. (2002) . Obstfeld, Maurice. International Economics. 6 edition. Pearson Addison Wesley. (I read Japanese edition)
Mankiw, Gregory (2000) . Principles of Economics. 3rd edition. Thomson Learning. (I read Japanese edition)
Nozick, Robert. (1977). Anarchy, State and Utopia. Perseus Books. (I read Japanese edition)
Rowls, John. (1971). A theory of justice. Harvard Univ Press. (I read Japanese edition)
Van Parijs, Philippe. (2000). A Basic Income for All. Boston Review. Retrieved August 16, 2004 from the World Wide Web: www.bostonreview.net/BR25.5/vanparijs.html
Eimei Onaga. Interview to CEO of Innovation Matrix. 5 August 2004.